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Informist, Friday, Jul. 17, 2026

 

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--Federal Bank: No target for FCNR deposits so far; will get our fair share 
--CONTEXT: Federal Bank management comments in post-earnings analyst call 
--Federal Bank: See one-time impact of 1.5-2.0% of net worth from ECL norms 
--Federal Bank: Monsoon, West Asia war continue to be headwinds 
--Federal Bank: Retain NIM growth guidance of 5-6 bps per qtr for FY27 

 

By Diksha Tripathy and Simran Rede

 

MUMBAI – Federal Bank expects a one-time transition impact of 1.5-2.0% of its net worth from the Reserve Bank of India's new expected credit loss framework, but does not foresee any material impact on its profit and loss statement thereafter, the bank's senior management said during a post-earnings conference call with analysts Friday.

 

"The new framework is effective 1st April 2027, and based on our estimates for the rest of this year, we expect the one-time transition impact due to ECL to be about 1.5% to 2% of our net worth. Secondly, on an ongoing basis, we do not expect any material impact to the P&L (profit and loss statement) due to this change," Executive Director Venkatraman Venkateswaran said.

 

The revised RBI norms require banks to adopt the expected credit loss framework and to make changes to the valuation of certain investment portfolios.

 

On the recently announced swap facility for Foreign Currency Non-Resident (Bank) deposits, the management said the bank has not set any target but expects to receive its "fair share" of deposits under the scheme.

 

The RBI's dollar-rupee swap facility allows banks to hedge fresh FCNR(B) deposit inflows at no cost for deposits with a tenure of three to five years. Banks have also been allowed to price these deposits in line with their internal policies, subject to the overall regulatory ceiling. Under the current norms, the maximum rate banks can offer on dollar-denominated FCNR(B) deposits is around 7.13%, based on the Secured Overnight Financing Rate.

 

Federal Bank Managing Director KVS Manian said the bank has entered the leverage-linked FCNR deposit segment and can offer such products to customers. Management expects the revised FCNR(B) window to support deposit growth. FCNR(B) deposits rose 37.76% on year in the June quarter. "Our usual share in FCNR deposits, normally, is of the order of 2.5%," a senior bank official said.

 

For the June quarter, Federal Bank reported a net profit of INR 11.77 billion on total income of INR 82.87 billion. Net interest margin fell to 3.33% from 3.74% in the preceding quarter but improved from 2.94% a year earlier. The bank also reiterated its guidance of a 5-6 basis point improvement in net interest margin every quarter during 2026-27 (Apr-Mar). Friday, the bank's shares closed 6.9% higher at INR 349 on the National Stock Exchange. The bank announced its results during market hours. End

 

Edited by Saji George Titus

 

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